2021 China GDP Growth Forecast at Over 8% Despite Challenges

China 2021 GDP growth
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on facebook
Facebook
Share on whatsapp
WhatsApp

2021 China GDP Growth

Fitch Ratings confirmed in July that China’s Long-Term Foreign-Currency Issuer Default Rating (IDR) stands at a strong ‘A+’ with a Stable Outlook and a 2021 China GDP growth projection of 8.4%. Reasons for the rating cite very strong external finances, a record of strong and resilient macro performance, and overall size of the economy. China had a robust 18.3% year-on-year growth in Q1 2021 amidst recovering from a 6.5% year-over-year growth in Q4 2020 and an overall disappointing GDP growth of 2.3% for the year 2020.

 2021 China GDP Growth

Real Estate Risk

In September Fitch updated their prediction and cut China’s growth forecast to 8.1% due to the Evergrande situation and resulting real estate quake. Earlier in September, it became apparent that the Evergrande group, a multi-billion dollar developer in China, was in deep trouble financially. On Thursday September 24th, Evergrande defaulted on an interest payment of nearly $84 million. The total liabilities of Evergrande are estimated at 300 billion USD. For comparison, Apple has cash reserves of $200 billion, only enough to fill two-thirds of the economic vacuum looming.

Whether the Chinese government bails out Evergrande or not, multiple experts in the field agree that China will find a way to soften the blow to the real estate sector through an organized breakup and restructuring of Evergrande.